MONEY ADVICE

• Introduction
• Personal Budget
• Don’t panic
• Self Help pack
• Personal Budget Sheet - This is a Microsoft Excel Spreadsheet which you must download to your computer. You will then be able to save, change and/or print it and use it to help you to control your money.
• Holding Letter - You can also download a template of a typical holding letter  which is a Microsoft Word Document and can be adapted for your own use and circumstances and then sent to each of your creditors

INTRODUCTION

Managing money can be difficult for many people.   However, it is worth taking time to plan your spending.   A sensible budget can help you set aside money for bills and avoid problems with creditors.

Here we aim to give you some idea on how to best manage your money, and how to deal with problems if they arise.

One of the best ways to help you manage your money is to draw up a personal budget, or financial statement.

THE PERSONAL BUDGET

Your income

You should put down all the money you are getting from benefits or work.   You should check that you are getting everything you are entitled to.   If you are not sure the CAB can help you.

Your expenses

It is very important that you budget to include all your priority expenses.   This is because if you do not you may lose a service such as electricity or gas; or even your home. Priority expenses are:

• rent (or mortgage)
• council tax
• gas and electricity
• court fines

When you have put down your priority expenses you need to look at your other expenses.   Remember to set aside an amount each week for food, clothing and travel.   Include any other regular payments such as catalogues or club payments.   You will also need to set aside money for other bills such as telephone or television licence.   You can be fined or imprisoned if you don't have a TV licence.

When you have put down all your expenses, add them up.   If your expenses come to more than your income you will need to look again to see if you can reduce any of the costs.     If your expenses are less than your income, you will have money left over for yourself; or saving!

YOUR DEBTS

Once you have calculated your income and expenditure you need to look at your debts.   Like the expenses these are divided into priority and non priority, the priority debts are the same items as for expenses, it follows that credit & store cards, catalogues, personal loans and any unsecured loans are non priority.

This distinction is important because negotiations with creditors differ depending upon whether it is a priority or non priority debt.   The normal procedure is to reach an agreement with the priority creditors and then any money left over is divided pro rata between the non priority creditors depending upon how much is owed.

What happens if I do not pay priority bills?:

• If you do not pay your rent or mortgage, you could lose your home.
• If you do not pay your council tax, bailiffs may come and take your possessions and you could be imprisoned.
• If you do not pay for your gas or electricity, your supply could be cut off.
• If you do not pay court fines, you may go to jail.

What if I can't pay a bill?

DON'T PANIC!

Contact the person who sent you the bill; especially if it is a priority expense.   Explain what the problem is and try to reach an agreement for payment.   If you cannot reach an agreement or are having trouble paying any bill, seek help from the CAB straight away.

Ask for help as soon as you think you may need it.

NOT when all else has failed.

How can the CAB help me?

If you came to us for money advice, we could follow these four steps:

Step 1     Maximise your income.

We could check that you are getting all the benefits you may be entitled to.

Step 2     Check your expenditure.

We could look at you budget and make sure you spending plans are realistic.

Step 3     Prioritise your debts.

We could identify and make sure that payment for priority debts is part of your budget.

Step 4     Negotiate with your creditors.

We could contact your creditors, explain why you can't pay and try to come to some arrangement.

What happens if things change?

Problems often arise when things change.   These changes can include a relationship starting or ending, the birth of a baby, children leaving school, illness, unemployment, or a change of job.

All these things can change the money you have.   They may mean you can get a benefit, but sometimes you can lose money.

If you have any doubt about the effect of a change, we can help you check it out.

Our 'Debt Pack' (also accessible from the menu) provides more detailed information and practical help on dealing with your debts.   Besides expanding on the topics above it also includes two example letters that may be adapted for writing to your creditors.

In addition, an Excel spreadsheet is available that is a working copy of our personal budget and should automatically total your income and expenditure and make pro rata calculations for the non priority creditors.   The spreadsheet shows a monthly budget but if you prefer a weekly budget then simply change the four cells with 'monthly' into 'weekly'.

Or you may prefer to use the self-help pack provided at the National Debtline website. National Debtline is a national telephone helpline (tel freephone 0808-808-4000) for people with debt problems in England, Wales and Scotland. Their service is free, confidential and independent.

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